TDS exemption claim under section 194A(3)(viia) to be examined by the departmental authority first

Writ petitions challenging a TDS-related notice were not entertained at the threshold because the claim to exemption under section 194A(3)(viia) depended on the petitioners first establishing their status as Primary Credit Co-operative Societies with supporting material. The Court held that the departmental authority could examine the objection, seek clarification from the Registrar or the State if required, and then decide the exemption claim by a reasoned order after hearing the petitioners. The petitioners were therefore directed to submit objections and certificates before the authority, and the proposed proceedings would continue only after a speaking order on exemption.

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Issues: Whether the writ petitions challenging the TDS-related notice under the Income-tax Act should be entertained at the threshold or the petitioners should be relegated to respond before the departmental authority on the plea that they are Primary Credit Co-operative Societies entitled to exemption under section 194A(3)(viia).

Analysis: The petitioners asserted that they fell within the exempted category of credit co-operative societies and relied on certificates issued by the co-operative authorities, while the departmental notice called for particulars and proposed action for alleged default in deduction and remittance of tax at source. The Court noted that the question of eligibility for exemption depended on the petitioners establishing their status with supporting material, and that the departmental authority could examine the objection, seek clarification from the Registrar or the State if necessary, and then decide the matter by a reasoned order after hearing the petitioners.

Conclusion: The petitioners were relegated to submit objections and supporting certificates before the departmental authority, and the proposed proceedings were to continue only after the authority determined the claim of exemption by a speaking order.

Final Conclusion: The writ petitions were not adjudicated on the substantive exemption claim and were disposed of by directing consideration of the petitioners' objections in accordance with law.

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